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Easing Millennials’ Investing Fears: Northwestern Mutual

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Millennials aren’t often described as pragmatic, realistic and responsible. But, when it comes to their finances, a study released Tuesday from Northwestern Mutual finds that’s exactly what they are.

The study found that 64% of millennials classify themselves as more inclined to save than spend, and more than half (53%) of millennials have set financial goals, compared with 38% of Americans age 35 and older.

“A lot of millennials don’t feel confident in having entitlements like Social Security around for them when they get to be retired,” said Chantel Bonneau, a Los Angeles-based wealth management advisor with Northwestern Mutual. “There’s the feeling that they really have to do it all by themselves, that they are a little more conservative by nature than maybe their parents were. They act much more like their grandparents.”

And Bonneau knows a thing or two about millennials — not only does she have about 250 millennial clients but she is a millennial herself.  A UCLA grad, Bonneau started working for Northwestern right out of college about five years ago.  

“By the nature of the fact that I’m young, I think I attract a lot of younger clients who feel that same way,” Bonneau said during a visit to ThinkAdvisor’s New York office. Adding, “I have clients of all different ages, but it’s obviously very interesting and fun for me to work with forward-thinking millennials when I’m given that opportunity because it’s close to my heart, the fact that I’m in the same age bracket.”

Through her conversations and work with millennials, Bonneau has seen the trends emphasized in the study.

“Millennials do feel tied to goals and the need to have a plan in place, and I enjoy my conversations with them and really helping them set those goals and build those priorities and become an accountability partner with them,” Bonneau told ThinkAdvisor. “I think that’s attractive to a lot of millennials, more so than other generations, to want to see [themselves] achieve and progress on an annual basis.”

The study found that 71% of millennials report feeling secure that they will achieve the financial goals they’ve set for themselves.

Millennials also realize the importance of having a plan. According to the study, one in three millennials cite a lack of planning as the greatest obstacle to achieving financial security in retirement, as opposed to only about one in four of the general population.

“I think a lot of millennials do believe there is a reality to planning,” Bonneau said. “That there is going to be hard work, there’s going to be sacrifice and discipline and really doing it on purpose. It’s not going to all work out if they ignore it.”

Based on this new knowledge, how can advisors best help their millennial clients? Bonneau addressed two key strategies she uses among her clients. The first is to get the client to acknowledge where they want to go, which may be difficult for millennials.

“It’s harder with millennials because  I know when I think about this for myself I’m not sure what exactly I want in retirement and I’m not sure exactly the trajectory,” Bonneau said. “But, I know for me personally that I want options and I want to be able to take good opportunities or get through difficult times and not have my entire life personally or financially go entirely off course.”

Bonneau also puts a significant focus on education with her millennial clients, especially since she finds “a lot of millennials that are much more conservative and cautious about entering the market.”

“[I spend] a lot of time on education so that they better understand market trends, not just in the last decade but in the last 100 years,” she said, “so they understand what makes interest rates go up and down, why does the stock market react, what does diversification really mean, what does taxation mean, what is marginal tax? Really just helping them understand so they can come at planning from a place of strength and not just out of fear.”

This is the first set of findings released from the 2015 Northwestern Mutual Planning & Progress Study, an annual research project commissioned by the insurer. The research was conducted through an online survey in January among 5,474 American adults aged 18 or older (including 1,081 millennials aged 18-34). Results were weighted to Census targets for education, age/gender, race/ethnicity, region and household income.

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